Nypro sold

Friday

Feb 8, 2013 at 6:00 AM

By Jan Gottesman MANAGING EDITOR

What does the sale of Nypro mean to the local economy?

As the largest employer in the region, with over 900 workers, as well as an active member of the community, the news of Nypro’s sale to Florida-based Jabil Circuit Inc. has some concerned about a possible parallel to another large company sold a generation ago. Colonial Press, once the largest employer in town, closed in the late 1970s, greatly affecting the economy of town.

But Ted Lapres, president of Nypro, said indications are that Nypro — and its new partner in Jabil — will continue to have a strong presence in the community.

The acquisition — which Lapres characterized as a “real partnership” — was announced Monday in a press release from Jabil’s officials.

“Technically, it is a merger agreement. We view it as a real partnership. We have great mutual respect. There are a lot of shared values,” Lapres said.

Timothy Main, president and chief executive officer for Jabil, said in a teleconference that the two companies have a “strong cultural affinity,” including a commitment to employees and customers.

Lapres said, during the acquisition talks, Jabil officials were apprised of the close relationship Nypro has in the community, including school programs, like FIRST robotics, and workers patronizing local businesses.

“They made a real commitment to this facility,” Lapres said. “They recognize this is our home. This old mill is part of our soul. It includes an incredible group of employees and great customers.”

Beth Walters, senior vice president for communications and investment relations for Jabil, said the close relationship between Nypro and the community is one of the things that appealed to the company. She said the company has no plans to “swoop in” and make wholesale changes.

“Ted and his management team are highly responsive and we hope to retain the vast majority of employees in Clinton and worldwide,” Walters said. “The people have the know-how, engineering talent and expertise in what they do.”

Lapres said the community component — whether FIRST, WHEAT community services or other organizations in the community — are “critical” to what Nypro is.

And even after the acquisition is finalized — which still requires votes from the employees, who own the company, as well as regulatory agencies — the Nypro name will likely remain on the Union Street property.

“They very much understand the value of the Nypro name and brand,” Lapres said. “We will continue to have a strong presence.”

Walters said Jabil shares the same culture of entrepreneurship that Nypro has.

“We have an entrepreneurial team where the best idea wins. We are competitive among ourselves to come up with a better solution to customer challenges.”

The similar company culture is a major factor that attracted Jabil to Nypro.

“You can’t change or build a culture. That is a prescription for disaster,” Walters said. “When we saw the culture and spirit of the people of Nypro, we were very excited about that. We don’t want to break anything that’s working.”

According to the press release from Jibil, based in St. Petersburg, Fla., the sale was for an estimated $665 million. Jabil has operations in 25 countries.

Nypro provides manufactured precision plastic products for customers in the healthcare, packaging and consumer electronics industries, with over $1 billion in total annual revenues. Nypro has approximately 12,000 employees and manufacturing operations in 10 countries. The company has advanced capabilities in product design, tooling, injection molding, surface decoration and complete product manufacturing.

“The combination with Nypro will extend Jabil’s materials manufacturing capabilities into the healthcare and consumer packaging markets as well as add depth to our consumer electronics business,” Main said.

“We just think it is a great strategic fit,” Lapres said in an interview Monday. “The business cultures are complementary. The priority is to grow our healthcare business. This facility is primarily a healthcare business. This is good for Clinton.”

“The combination with Nypro would also open an exciting new market in packaging for customers in the food and beverage, household and personal care industries,” said Bill Peters, president of Jabil (effective March 1) in the press release. “The rigid plastic packaging market is a $140 billion addressable market globally. We are excited about aggressively pursuing this market on a global basis and look forward to working with the talented people within Nypro.”

Nypro was founded in 1955 in Clinton. Current chairman Gordon Lankton, a member of the Manufacturing Hall of Fame and the Plastics Hall of Fame, took an ownership interest when joining the company in 1962. Lankton acquired complete ownership in 1968 and led the company to success in new markets and a global presence. In 1998, Lankton sold most of his stock to an Employee Stock Ownership Plan (ESOP), which now owns a substantial portion of Nypro’s stock along with employee-owners.

“I have always believed in growing our business in order to create meaningful opportunities for our employees. Our partnership with Jabil does just that, and I am confident they are an ideal partner for Nypro,” Lankton said in a statement. Lankton is traveling in Russia this week; he is also founder of Clinton’s Museum of Russian Icons.

Completion of the transaction, which is subject to a shareholder vote by participants in Nypro’s ESOP, as well as by Nypro’s shareholders, regulatory antitrust clearances in the U.S., China and other jurisdictions and certain other customary closing conditions, is currently expected to take place during Jabil’s fiscal third quarter. The total purchase price is expected to be $665 million, subject to certain adjustments, and is expected to be funded from Jabil’s existing cash and credit facilities. The transaction is expected to be neutral to slightly accretive to Jabil’s core earnings per share for the balance of fiscal 2013 and accretive to earnings per share on both a core and GAAP basis in fiscal 2014.